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by Julian Kisselevits, Head of Payment Optimization, Elavon
Airlines are confronting the reality of a new payments landscape due to the complexities of operating across multiple channels, with many partners and intermediaries, across the globe. Consumer choice is proliferating with new payment methods, which are country specific, regional or international in terms of use. The pandemic accelerated and strengthened this trend as online shopping became commonplace.
“Airlines have to pivot from their traditional stance,” says Julian Kisselevits, Elavon’s Head of Payment Optimization.
“They must view payments as a service and revenue driver rather than just a functional process at the end of a transaction.”
Requirements and behaviours are constantly changing, and this impacts acceptance (critical to maximizing revenue), direct costs, and thus the bottom line. Regulators have an increasing focus on payments, as evidenced by the European PSD2 rule, (which requires cardholder verification of every transaction) and soon, the PSD3 framework coming into force. Payment security is non-negotiable, as consumers expect their payment details to be secure at all steps of the process.
Within these constraints, optimization is a lever that airlines can pull to take advantage of the ecosystem. Two key areas in optimization opportunity are: maximizing acceptance and managing costs.
When it comes to acceptance, it is imperative that your acquirer or payments partners can provide you with the necessary information to dynamically make adjustments while preventing fraud. As for cost, fee increases are outpacing volume growth, on a proportional basis, across the industry which is tightening margins.
Partnering for optimization
As a business focused on flying passengers safely around the world, airlines do not always have the resources and knowledge to monitor and manage all aspects of payments processing; so airlines must be strategic in their approach. “This means being smart with the choices that you make,” says Kisselevits. “Often, for an airline to operate best, it needs to partner with an expert or experts. Only a few airlines have specific payment departments, despite its growing importance.”
From increasing acceptance, to reducing costs, to keeping compliant with global and country regulations, your payments providers should be constantly monitoring, updating, consulting and advising on optimized payments.
In fact, Elavon – who holds multiple events across the globe offering advice and industry insights – recently saved one major transatlantic airline $1 million per annum by reviewing regional processing and advising on the most efficient routing options.
It’s also important to choose an acquirer that has licenses to process transactions from a broad array of countries around the world.
“Also,” emphasises Julian, “key are integrations with airline industry compliant leading payment gateway providers and payment orchestrators to help airlines connect in the way that aligns to their payments strategy.”
The future of payment
Looking ahead to the evolved payment landscape, Kisselevits highlights three main areas – optimization, security and artificial intelligence (AI). Firstly, how do you get the best performance out of your transaction for the most efficient price?
Secondly, fraud prevention needs to stay one step ahead of would-be fraudsters. Tokenization aims to tackle that in the near future, by replacing sensitive payment information, with a random “token”, usually an unrelated set of numbers or characters.
And finally, AI. “I know AI is being seen as the panacea for all ills but in payment it really could make a big difference in terms of transaction routing, metric analysis, and fraud detection,” concludes Kisselevits.